Logistics Coordinator how-to
How to Calculate a Reorder Point with Safety Stock
Reorder points prevent stockouts without tying up too much cash in inventory.
Quick answer
Reorder points prevent stockouts without tying up too much cash in inventory. In short: find; find; calculate, then complete the remaining steps below.
Step by step
Find average daily demand, for example, 40 units per day.
Find the supplier lead time, for example, 10 days.
Calculate lead-time demand: 40 × 10 = 400 units.
Decide on safety stock to cover variability, for example, 120 units.
Reorder point = lead-time demand + safety stock = 520 units.
Set the reorder point in your inventory system and review it as demand changes.
Safety reminders for logistics coordinators
- Verify carriers’ authority, insurance and safety records before booking
- Follow hazmat shipping rules and documentation requirements
- Protect customer and pricing data
- Plan delivery schedules that allow drivers to comply with hours-of-service rules
Key terms
Supply chain · 3PL · Freight broker · TMS · Truckload (FTL) vs. LTL · Lead time: see the full logistics coordinator glossary.